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When someone says the economy is doing well, what does that even mean? Like, for workers or for employers or an average of the country as a whole? Is the objective here to tame inflation or is it to lower unemployment or to have less inequality? Is it some of these things?
Is it none of these things or a mix of all of the above? Hello and welcome to Planet Money, I'm Darian Woods. The world of economics is filled with all sorts of measuring sticks. And over time, all kinds of government agencies and universities and even private companies have come up with different ways to measure sizes of the economy.
And we pay attention to these measurements because they go into all kinds of huge decisions. Things like government policies, but also personal investments. So today on the show, we're going to lift the curtain on two of these yardsticks. We're going to meet the people behind the inflation and jobs numbers and see how the ruler gets made.
Our first metric for the economy comes from host Stacey Bannock-Smith. And this one's about inflation, the big worry of the last few years. Inflation is just a fancy name for prices going up. And if prices start going up at a really fast pace, it can signal the beginning of a so-called inflationary spiral.
That means prices going up out of control. So like your latte goes from $4 to $10 to $50. That can cause enormous destruction to an economy. And of course, to the savings of millions and millions of people.
It's one of the most important indicators for any economy. It's introducing something called the Consumer Price Index, the CPI, which is a measure of the price of everything we buy. The process of calculating CPI is meticulous. It's labor-intensive.
It involves hundreds of people. It's also top secret. These data are closely guarded because they need to be above suspicion and tampering. But the Bureau of Labor has agreed to let us tag along for half a day.
Yes, they did. All I had to do was sign like eight non-disclosure agreements. But totally worth it. To get the inflation number every month, millions of data points are involved, gathered by around 450 dedicated workers.
Hi, my name is Emily Macitus, and I am an economist with the United States Department of Labor, Bureau of Labor Statistics. Every month, Emily and her colleagues go on a hunt. A hunt for inflation. To do this, they track the price of, well, just about everything.
Rents, haircuts, trucks, toasters, raincoats, boxes of wine, burgers to go, weddings, funerals, yoga pants. And my favorite saying is we follow prices on pretty much everything that is legal in the country. This is a huge job. And it starts with surveys taken by thousands of households.
Just everyday people all across the country who write down in really minute detail how they spend their money. Yeah, so they'll write down something like, you know, I bought butter at the store. And then inflation watchers like Emily will find, you know, a particular brand of butter at a particular store. And they will track the price of it for years.
Everything has a code. Salted butter has one code. Unsalted butter has a different code. Butter and sticks, different code.
Organic butter, that's also different. And this is true for every consumer product in the U.S. We have a 600-page manual for a reason. Really?
It's 600 pages? Have you read it? There is a lot. I have.
Really? Every page? There is a lot to learn. I have.
Yep. To check these prices, trackers like Emily used to drive around to stores, find a particular tub of unsalted butter, or a 100% wool boatneck sweater in size 8, and look at the price tag for that particular item. And then come back to that store to look at that same item month after month. Which sounds really kind of old school and needlessly labor-intensive, but this data is just that important.
It has to be accurate. Of course, COVID changed everything. In-person was no longer an option. So now, instead of walking into stores and checking price tags, now Emily's day is a lot of this.
Mr. Hart, this is Emily Maslow, just calling with the Bureau of Labor Statistics. How are you doing today? Phone calls.
Dozens a day. First up, a sporting goods store in Delaware. So, we are just doing the consumer price index update on our pair of socks. Socks.
Because I signed a non-disclosure agreement, it's confidential. But these are white athletic socks. Of course, they're not just any white athletic socks, though. Just verifying some specifics on the item.
It's knee length, is that correct? Yeah. And then I have that it is 85% acrylic and 15% nylon? Yeah.
Okay, great. And I have that has moisture wicking, is that correct? Yeah, repels moisture. Okay, great.
Emily makes a note of all of this. She gets to the right code. And now, the moment is here. The price.
$7.99. $7.99 for the socks. Turns out, the price hasn't changed since last month. So, the sock indicator, Darian, is telling us inflation isn't happening.
But that is just one product in one store. And you cannot measure inflation using just one pair of socks. And Emily has at least three more price checks ahead of her today. And it's not just products like socks.
The Consumer Price Index tracks services, too. Haircuts, car repair, workout classes. Daycare. In this case, the weekly rate for a two-year-old at a daycare in Philadelphia.
For this one, Emily checks the price on the daycare's website. She does a lot of that these days. So, I have older toddler here, and the weekly full-time tuition is $320. That changed.
$306. So, inflation in action. Inflation in action. The price of daycare is up 5%.
About $14 a week. And that adds up. It's around $700 a year. So, there it is.
We've seen some evidence of the dreaded inflation. Yes. As you can imagine, Darian, I got very worked up about this. I was like, here he is.
Inflation in the flesh. And Emily was like, okay, let's look at a few more prices. Let's make some more calls. So, she let me tag along to a couple more phone calls, including to a little corner store in Philadelphia, to check the price.
Butter. It's butter. It's not that exciting. But we will be the judge of that.
I am just calling to do our monthly check on butter for the Consumer Price Index. Specifically, a box of four sticks, unsalted. $435. $435?
Yes, ma'am. Okay. So, that's on up 25%. It looks like the last time it was $349.
A price rising by that much actually requires filling out a special form. I mean, it could be evidence of spiraling inflation. But Emily's been doing this for years, and her spidey sense is going off. So, before she fills out that special form, she asks the store owner to double-check the price of that butter.
The store owner puts the phone down. We wait for a minute. Comes back on. Okay.
So, it's not $435 right now? No, it's $245. So, it turns out he was looking at the wrong brand of butter. In fact, the particular butter Emily's been tracking is part of a promotion this week.
Two for $5. So, one package costs $250, which is actually less than it cost last month. Okay. That's a huge increase for butter, huh?
This is why Emily does what she does. Why there's a fleet of people like Emily who check the details. These details matter. The inflation rate, it influences markets.
It's got policymakers issuing statements. It even affects the price of gold. And that number comes down to this. A woman calling a supermarket in Philadelphia to check the price of butter, and then double-checking to make sure the data is right.
After the break, behind the scenes of the Joss numbers. Argentina's currency is plummeting, and the leading presidential candidate there has a solution. Replace its peso with the U.S. dollar.
It's time that we got elections. It's time that there was a shift in office, or that could be a shift in office. The exchange market was shaking for some time. In our next bonus episode, Argentina's long and complicated relationship with U.S.
dollar. Planet Money Plus listeners can check that out now. If that is you, thank you for your support. If it is not you, it could be.
Sign up at plus.npr.org. Our second indicator for the economy today is job growth. Host Weyla Wong joins me to tell you about jobs numbers. Jobs growth is one of our favorite economic indicators.
It's this really direct measure of how the economy is going in a way that has this tangible, wide-reaching effect on everyday people. And like all superfans, we love going behind the scenes. We want to go backstage to the economic statistics green rooms and eavesdrop on the spectacle heroes entering numbers into databases. Earlier, we sat in on how price inflation data was collected, and now we've got to learn about how jobs numbers are put together.
So there are two main surveys that go into the monthly jobs report. One that surveys households for things like unemployment, and there's a second survey of businesses and government agencies. This one's called the Establishment Survey, and it's where you get the jobs numbers. That X number of jobs get added to the economy in a given month.
And every month, the Establishment Survey interviews about 130,000 employers. It covers about a third of all non-farm workers in the country. Some employers can click the survey online, but a lot of it is done the old-fashioned way, over the phone. Hi, Darian.
It's Erica Henyon with the U.S. Department of Labor. How are you doing this afternoon? I'm doing pretty well.
How are you today? Erica Henyon is an agent for the Bureau of Labor Statistics in the Department of Labor. She is one of about 300 people working the phones to paint that big picture of jobs in America. Erica used to work as a bakery manager, so she's no stranger to chatting with people.
And I will attribute that to my mother. She's a hairdresser, so she's been a person who's always talked to people, and so I've just been around them. I mean, hairdressers know everything, really? Yeah, they do.
I mean, I spilled many a secret to my hairdresser. And this chit-chatting is really important, because when we spoke, Erica was aiming to make 400 calls for the month with people who don't necessarily want to answer them. It gets stressful towards the end, because you're like, I want to make those numbers. A lot of businesses, when they call and we talk to them, they're not going to do it, because it's not mandatory.
The more people who pick up the phone, the more comprehensive the survey is, and the more accurate the jobs Friday numbers will be. While I'm on the line, Erica calls up a professional employer organization in Arizona. This is the kind of company that shares hiring with small businesses. It's Erica with the U.S.
Department of Labor. How are you doing today? Doing good. I think I know your voice might help when you call.
I know. It's been a while for us. The way the survey works is that the same business will get a call each month for anywhere between two and four years. That way, they're already familiar with how the survey works when Erica dials them.
And so for that pay period that included May 12th, then how many total employees work to receive pay? 80. Hey, went up another person. Yay.
We'll take it. It doesn't happen very often lately. Erica asked a few more questions. The same she'll ask every employer.
How many of their staff are women? How many are in non-supervisory roles? Total payroll costs for everybody. And the total hours were.
And Erica jot down notes for why this company's employees were working more hours this month. You have a very happy Memorial Day, and I'll check back in with you in June, okay? All right. Thank you.
You too. Have a good one. Okay. So if this is representative of the rest of the economy, then we're doing pretty good in the labor market.
Yep. I will take any little bit of increase that I can see, definitely. I'm relieved that it's another business that I can check off my list, and then I just put my nose to the grindstone and call the other 399 cases that I have. 399.
We call it smiling and dialing, and you just call, you collect the data, you thank them, you schedule them forward, and you hang up, and then you just do the next call. And then all of a sudden, you look up, and it's lunchtime, and you're like, where did the morning go? Has it gotten easier or harder to get people to respond over the years? It has gotten harder.
It has gotten harder over the years, especially after the pandemic. There has been some pushback from different respondents that don't want to report the data because of the political economy the way it is, and everything like that. There has been some pushback. There is some distrust there, and I've actually had a few people that have yelled at me and screamed at me, and then they called me back and apologized, because they realized that they took it out in the wrong person.
I'm the person that they can physically talk to about the government. Well, I'm glad they at least apologized, but it's like, maybe they should call their congressperson instead of yelling at Erica. Yeah, absolutely. Call your congressperson.
Erica says she tries to get people to stay on the phone by helping them understand why the job numbers are so important. These numbers feed into town planning or business decisions about relocation, and also big decisions at the central bank, the Federal Reserve. So remember that the Federal Reserve has two mandates. At the moment, it is really focused on getting price inflation down, but it also has the goal to keep employment high, to keep jobs high.
And for those jobs numbers, the chair of the Federal Reserve and his colleagues rely on the numbers spoken to people like Erica in a Florida call center. At the moment, the Federal Reserve might keep raising interest rates, which will make people's mortgages or car loans more expensive. And with job numbers solid, the Federal Reserve is more likely to keep raising interest rates to fight inflation, but that could change if the labor market deteriorates. I mean, it trickles down to your price of bread, milk, and eggs, so it does affect you.
You just don't see it. And along with explaining why the job report matters, Erica also makes sure to build a strong relationship with the people that she calls. I have a couple of respondents that share a birthday, and so I'll make sure I put a note in that they had a birthday, or it was their son's birthday party, and ask them how everything went, kind of thing. I've helped some people actually plan vacations to Florida, because they've asked, they've been wanting to visit the area, and I'll help them find restaurants that locals like to eat at.
So let me get this straight. Erica's like an event planner. She remembers birthdays and special occasions. She's like a travel agent.
I know, I know many jobs wrapped into this one interviewing job. It's incredible. Erica also gets tips about specific industries from people like a hairdresser mother. I'm like, mom, I'm like, salons, when should I not call a salon?
And I try and take that into account, and I take some advice from her. That Tuesdays are her busiest day, so then I might not call them on a Tuesday to follow up with them. Erica's soft skills are critical for getting hard numbers correct. Several months ago, we had jobs reports that didn't seem so stellar, but they were later edited to be actually quite good.
The numbers were revised up. And one reason for those revisions was the Bureau of Labor Statistics finally tracking down those respondents and getting their missing numbers after the deadline for Jobs Friday. To get ahead of the clock, Erica does one other call. This one to a corporate office in California.
How many total employees work to receive pay? That would be 506 employees. And I feel like it's about time for me to leave Erica to continue with her work. I still have another eight more calls left, and I'm here for like another 45 minutes.
Erica ended up collecting 298 responses before the deadline. A little less than she hoped, but not for lack of trying. She said there was one day where she squeezed in a massive 115 calls. Well, we are always looking out for those jobs numbers, so we thank you for doing the hard work, getting those 300 or 400 calls every single month and getting those numbers out there.
Thank you. These episodes were originally reported for the Indicator from Planet Money podcast, Planet Money's daily podcast. Follow along if you're not already. And if you've got any slices of the economy, any metrics that you want to learn much more about, send us an email.
We're at planetmoneyatnbr.org. This episode was produced by Julia Ritchie and Jess Kung with help from James Sneed. Engineering is done by Billy Moo, James Willis, and Robert Rodriguez. Who's fact-checked by Michael Hart and Corey Bridges and edited by Kate McKenman of VLA.
Alex Goldbach, the executive producer. Special thanks to Nicholas Johnson at the Bureau of Labor Statistics who really helped make this whole episode possible. I'm Darren Woods. This is MBR.
Thank you for listening.